The UK's value-added tax (VAT) system provides a refund mechanism for importers, helping to avoid goods being detained for failure to clear customs, as well as providing European consumers with statutory invoices, among other things.
Once you've applied for a UK VAT number, it's important to file your VAT on time. Earlier this year, HMRC introduced a new penalty system that will result in penalties for late VAT filings or late tax payments for sellers who file VAT returns or fail to pay their taxes on or after 1 January 2023. When penalty points accumulate to a certain level, the seller will be required to pay an additional penalty of up to £200.
The frequency of VAT filing in the UK is unnatural quarterly, and it is required to file 4 times a year. Although the start time of filing is not fixed, the deadline for VAT filing and the deadline for tax payment are both set before the 7th of the month following the filing.
Natural quarters: January to March, June to September, October to December;
Unnatural quarters: There are no month restrictions, for example, a quarter can be from February to April, for a total of three full months.
Penalty points threshold for late declaration.
For example, quarterly filing: Seller penalty points are capped at 4 points, and 1 point will be imposed for each late declaration. When the penalty points accumulate to 4 points, the seller will face a fine of 200. After 4 points, the 4 penalty points will persist, there will be no penalty for the next on-time submission, and a penalty of 200 will be received for each late declaration after 4 points.
Note: If you have any objections to the penalty points, you can appeal by sending a letter to the tax bureau or on your ** account.
Changing the filing cycle can be a penalty factor.
When you change the accounting period:
If the adjusted number is negative, the penalty will be set to zero.
If the adjusted points are zero, no adjustment will be made.
How late fines are calculated.
The calculation of overdue fines has been adjusted through the new regulations, and the amount of the penalty will now be gradually determined according to the length of the overdue period. Paying early will result in a lower penalty, while the penalty amount will gradually increase as the overdue period increases. Therefore, the sooner the payment is completed, the less the penalty will be;Conversely, the longer the overdue time, the more the penalty will gradually increase.
Late payment of fines:
There are late fees for the following payments due for VAT.
1.in your VAT return.
2.After amendments have been made to the return or correction.
3.The VAT assessment we issue when you don't file your return.
4.From the VAT assessments that we have published for another reason.
Reminder: If you have zero declaration for a long time, no matter which country you are in, the tax office may consider it as no tax number requirement and cancel the tax number.
Late VAT fines.
If a payment is 16 days or more late, you will receive a first late payment penalty;
When a payment is 31 days or more overdue, the first late payment penalty will increase and a second late payment penalty will be received.
Maintaining tax compliance has always been a top priority, and it's important for businesses selling in the UK to avoid late or late filings, which could lead to penalties. In order to ensure that your account is not negatively affected and to avoid high fines, Jude strongly recommends that you file and pay VAT on time and operate your business in a compliant manner.